Court File and Parties

COURT FILE NO.: CV-18-449 DATE: 2018-09-05 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: MERA SOFTWARE SERVICES, INC., Plaintiff AND: INTELLIGENT MECHATRONIC SYSTEMS INC., Defendant

BEFORE: The Honourable Mr. Justice D.J. Gordon

COUNSEL: Greg Murdoch, Counsel for the Plaintiff Mary Hayhow, Counsel for the Defendant

HEARD: September 4, 2018

ENDORSEMENT

[1] The plaintiff moves for summary judgment. The defendant requests the motion be adjourned until mediation takes place.

The Parties

[2] Mera Software Services, Inc. (“MERA”), is a corporation, incorporated pursuant to the laws of the State of Delaware, one of the United States of America, having its head office in the State of California. MERA provides software development services and products worldwide, including in Canada.

[3] Intelligent Mechatronic Systems Inc. ("IMS") is a corporation, incorporated pursuant to the laws of Ontario, having its head office in Waterloo. IMS provides services and analytics to the automotive industry.

The Agreement

[4] The parties entered into a written Consulting Agreement on June 23, 2016. MERA agreed to supply software development services. IMS agreed to pay for same. The agreement set out the manner of calculating the fees for services and the method of dealing with objections to an invoice. Of importance here is paragraph 38 which provides as follows:

38. Dispute Resolution. The Parties shall work in good faith to resolve any disputes that arise under this Agreement. Where a dispute arises out of or in connection with this Agreement that cannot be resolved by these persons, and it is not related to the IMS obtaining, protecting or enforcing its intellectual property rights, the Parties agree to seek an amicable settlement of that dispute by mediation. If the Parties cannot agree on a mediator within ten (10) days after referral of a matter to mediation, then either party may make application to court to appoint one. The medication shall be held in Waterloo, Ontario, Canada in accordance with the Arbitration Act, 1991 (Ont.) c. 17, as amended and the costs of mediation shall be shared equally between the Parties.

[5] There have been several amendments to this agreement, also in writing, none of which impact on the issues between the parties.

[6] MERA provided services to IMS from June 2016 to March 2018. Invoices were regularly delivered. IMS paid these invoices until October 2017. IMS never disputed an invoice in the manner required under the agreement. MERA demanded payment. When such was not received, it ceased work on March 31, 2018 and gave notice terminating the agreement.

Litigation History

[7] The statement of claim was issued on April 13, 2018. MERA sought damages of $568,190.48 in United States Dollars, interest and costs. The damage claim is said to represent the unpaid invoices. Prejudgment and post-judgment interest is sought at 18% per annum pursuant to the agreement.

[8] The statement of defence is dated June 1, 2018, served June 4, 2018. IMS alleges that they have not breached the terms of the agreement, and denies owing the amount claimed by MERA.

Summary Judgment Motion

[9] MERA’s motion for summary judgment was dated July 9, 2018, first returnable on July 19, 2018. On the return date, the motion was adjourned to be heard as a long motion in the week of September 3, 2018, with terms pertaining to responding material and cross-examinations.

[10] Responding material, required by July 30, 2018, was served on August 28, 2018. In his affidavit, Jeoff Shiekh, Chief Corporate Office of IMS, reports of negotiations aimed at resolution having occurred and makes reference to paragraph 38 of the agreement. He indicates that mediation has not occurred and that IMS insists on the enforcement of its right to mediate the dispute.

[11] It appears cross-examinations were not arranged as this motion came on for a hearing on September 4, 2018.

Positions of the Parties

[12] On behalf of MERA, Mr. Murdoch submits the only issue before the court is with respect to the mediation paragraph as IMS has not presented any evidence regarding their purported dispute to the plaintiff’s claim. Without a dispute, Mr. Murdoch argues there is nothing to mediate.

[13] Mr. Murdoch also says the mediation provision is not a condition precedent to starting litigation but, rather, is a clause directed at trying to resolve. Again, he argues IMS has failed to identify what is in dispute, making mediation meaningless. Lastly, Mr. Murdoch submits the provision is not for arbitration, a system allowing for decision-making and a stay of the litigation process.

[14] For IMS, Ms. Hayhow refers to the statement of defence, as previously addressed, indicating a dispute. She submits the mediation provision is mandatory, a clause specifically negotiated by the parties as part of their agreement.

[15] Ms. Hayhow acknowledges her client’s request to mediate was not presented until last week, saying IMS thought a resolution might be negotiated. She disagrees with Mr. Murdoch’s comparison to an arbitration clause, arguing mediation can result in resolution.

[16] Ms. Hayhow emphasizes that IMS is not requesting a stay or dismissal of the plaintiff’s motion. Rather, only an adjournment is sought to allow for mediation.

Analysis

[17] In general terms, deference is owed to the agreement of the parties. Here, mediation is a clear expression of their intentions in resolving disputes

[18] However, I fail to see what is in dispute. The statement of defence presents only a generic denial of breach and liability. No detail is provided. Surely, if IMS is taking the position MERA did not provide the services, or that the services were deficient, or that the invoices are improper, such would have been pleaded.

[19] The affidavit of Mr. Sheikh does not help identify what is in dispute. Rather, it simply says they want mediation.

[20] Rule 20.04, Rules of Civil Procedure, requires the court to grant summary judgment unless there is a genuine issue for trial. Pursuant to Rule 20.02, the responding party must set out specific facts showing there is a genuine issue for trial.

[21] When, as here, the sole issue on this motion is whether mediation ought occur prior to the motion, I conclude the responding party must identify, with some particularity, what the dispute is between the parties. I agree with Mr. Murdoch, IMS has not identified a dispute and, hence, there can be nothing to mediate. The lack of detail in the statement of defence and responding affidavit strongly suggests the mediation request is merely a delaying tactic. There is absolutely no evidence presented by IMS regarding any dispute.

[22] In result, the request of IMS to adjourn the motion until mediation occurs is denied.

[23] This is a collection matter. MERA has presented evidence as to services rendered and invoices presented. IMS has not tendered any evidence to challenge MERA’s claim. There is no genuine issue for trial. Summary judgment, therefore, is granted in favour of MERA for $568,190.48 in United States Dollars, plus prejudgment and post-judgment interest at the rate of 18% per annum.

[24] I expect the parties will resolve the issue of costs; failing which, brief written submissions are to be delivered to my chambers in Kitchener within 30 days of the release of these reasons for decision.

D.J. Gordon J.

Released: September 5, 2018